12 cents earnings
Thursday February 24, 4:04 pm Eastern Time
Company Press Release
SOURCE: GSI Lumonics Inc.
GSI Lumonics Reports Sharp Increases in Fourth Quarter Revenue and Earnings, Backlog at U.S. $83 Million
KANATA, Ontario, Feb. 24 /PRNewswire/ -- Based on strong and diversified revenue growth, GSI Lumonics Inc., (Nasdaq: GSLI, Toronto: LSI) today reported net income of $4.2 million (12 cents basic, 12 cents fully diluted) for the three months ended December 31, 1999. The Company reports in U.S. dollars.
Sales in the fourth quarter were $88.7 million. Gross profit was $34.4 million (38.8% gross margin). Research and development expenses were $8.7 million (9.8% of sales), while selling, general and administrative expenses were $17.9 million (20.2% of sales).
GSI Lumonics was formed March 22, 1999 as a result of a merger between General Scanning and Lumonics. To conform with U.S. GAAP and to reflect the purchase accounting method used to transact the merger, results for the first 11 weeks of 1999 and all of 1998 are those of Lumonics only. Therefore, fourth quarter and 12 months results of 1998 do not provide a meaningful basis for comparison, although they are provided in the financial statements attached.
On a sequential basis, compared to the third quarter of 1999, fourth quarter sales increased 14% and net income more than doubled. Order backlog at December 31, 1999 was $83 million compared to $81 million to end the third quarter and $73 million to end the second quarter. Fourth quarter order bookings were $90 million.
''At the time of our merger we set operational objectives for the last three quarters of 1999,'' said Charles D. Winston, President and CEO. ''These included sequential gains in sales, profitability and backlog. In each case we exceeded our objective.''
Mr. Winston said higher earnings, revenue, backlog and bookings in the fourth quarter primarily reflect improving market conditions and ''accelerating customer acceptance of our broad base of technologies and services. We are particularly pleased by the brisk pace of sales in the electronics market - with sales up 62% over the third quarter - and the growing signs of recovery in semiconductor, where sales increased 34% on a sequential basis. These two markets combined represented 44% of fourth quarter sales and are keys to future growth.''
1999 Year-End Results
For the 12 months ended December 31, 1999, sales were $274.6 million with strong market and geographic diversification also in evidence. Gross profit was $95.8 million (34.9% margin). Gross profit margin reflects the impact of $3 million of inventory provisioning taken in the first quarter and weaker market conditions in the first half of 1999 compared to the second half. Research and development expenses were $28.7 million (10.5% of sales), while selling, general and administrative expenses were $64.7 million (23.5% of sales).
During the first quarter of 1999, the Company took a $19.6 million restructuring charge related to integrating General Scanning and Lumonics. A one-time charge of $14.8 million was also booked in the first quarter to expense in-process research and development. Including these restructuring and one-time expenses, net loss for the 12 months ended December 31, 1999 was $34.8 million ($1.14 per share basic and fully diluted).
Liquidity and Financial Condition
At December 31, 1999, cash and short term investments totaled $32.6 million and short-term operating loans were $23.1 million, compared to $32.3 million of cash and loans of $7.3 million at December 31, 1998 and $32.0 million of cash and loans of $14.6 million at October 1, 1999. Working capital was $103.7 million at year end 1999 compared to $86.0 million at December 31, 1998 and $99.0 million at the end of the third quarter of 1999.
Outlook and Commentary
''Market conditions rapidly improved in the second half of 1999 setting the stage for what we expect will be a strong fiscal 2000 year,'' said Mr. Winston. ''We believe GSI Lumonics is well positioned to capture a substantial and profitable share of future growth. We are focusing resources on key growth markets namely semiconductor, electronics and automotive. In support of this strategy we are preparing to launch some very exciting new and enhanced products this year. We are beginning to achieve greater efficiencies through our streamlining efforts. And, our backlog entering the year is sizeable.''
Based on the Company's current position as a supplier of optics for the telecom market, Mr. Winston said GSI Lumonics recent and planned investments in optic design and manufacturing will increase capacity and capability to keep up with the demands of the market. ''We expect sales from our telecom optics business to more than double this year with the possibility it could represent 3% of sales in 2000.''
Given market fundamentals and the momentum heading into the new year, Mr. Winston said the outlook for the first quarter is ''positive, bearing in mind of course the traditional pattern of lower first quarter sales and earnings, relative to the fourth quarter of the previous year. In periods of market recovery, seasonal sales patterns have often been masked, so it's hard to tell at this point how the first quarter will compare sequentially with the fourth quarter of 1999. Regardless, we are optimistic about both the quarter and the year.''
Mr. Winston added the Company's objective for 2000 is to ''further refine our business model to strengthen core competencies in selected fields. We are becoming a more focused company. We're committed to deploying capital - including 10% of 2000 sales to R&D - to enhance our technological underpinnings. We've created the industry's largest global service and distribution capability. And over the next two years, we intend to use our advantages to unlock significantly more value for shareholders and customers.''
Corporate Description
GSI Lumonics Inc. brings laser-based automated advanced manufacturing systems, instrumentation and components to leading industrial companies worldwide. The Company supplies products and service to the semiconductor, electronics, medical, automotive, aerospace and consumer packaging markets. GSI Lumonics' common shares are listed on Nasdaq and The Toronto Stock Exchange. The Company's web site address is www.gsilumonics.com.
A conference call is scheduled for 5:00 p.m. Eastern time, today, Thursday, February 24th. To participate, call 1-800-621-5346 no later than 4:55 p.m. Eastern time and identify yourself to the operator.
For more information:
Fran Crecco
Investor Relations
978-439-5511 ext 6104
To the extent this new release discusses financial projections, information or expectations about GSI Lumonics Inc. products or markets, or otherwise makes statements about the future, such statements are forward looking and are subject to a number of risks and uncertainties that could cause actual results to differ materially from the statements made. The factors include the fact that the Company's sales have been and are expected to continue to be dependent upon customer capital equipment expenditures, which are, in turn, affected by business cycles in the markets served by those customers. Other factors include continued volatility in Asia and in the semiconductor industry, the risk of order delays and cancellations, the risk of delays by customers in introducing their new products and market acceptance of products incorporating subsystems supplied by the Company, similar risks to the Company of delays in its new products and other risks detailed in the Company's' Annual Reports and Quarterly Reports. |
